Thinking about asking an older parent to move in with you? If that means renovating your home to create a separate living space, you might qualify for a federal tax credit introduced to help offset those costs: the Multigenerational Home Renovation Tax Credit (MHRTC).
Multigenerational households—homes where three or more generations live under one roof—are among the fastest-growing household types in Canada. Factors such as high housing prices, limited housing supply, rising interest rates and an aging population have contributed to this trend. For families who want to provide care and companionship for aging relatives, creating a self-contained secondary unit can be both practical and economical. The MHRTC was introduced to help make that option more affordable by providing a refundable tax credit for qualifying renovation expenses.
What is the Multigenerational Home Renovation Tax Credit (MHRTC)?
The MHRTC is a refundable federal tax credit that came into effect Jan. 1, 2023. It was announced in the 2022 budget to assist homeowners who renovate their principal residence to create a self-contained secondary unit for a qualifying relative.
Under the credit, you may claim 15% of eligible renovation expenses up to a maximum of $50,000. That means the largest refund available under the MHRTC is $7,500 (15% of $50,000). If your qualifying costs are less than $50,000, the credit equals 15% of those expenses.
Who is eligible for the MHRTC?
The credit applies only when a renovation creates a secondary unit for a qualifying relative. A qualifying relative is one of the following:
- A family member who is 65 or older by the end of the taxation year in which the renovation is completed
- A family member who is eligible for the Disability Tax Credit and is at least 18 years old by the end of the taxation year in which the renovation is completed
The secondary unit must be self-contained, with a private entrance, kitchen, bathroom and sleeping area. The credit is limited to one renovation per qualifying family member. For example, if you claim the credit to create a unit for a parent, another sibling cannot also claim the credit for a separate renovation for that same parent.
Which renovation expenses qualify?
Most reasonable renovation expenses directly related to creating the secondary unit are eligible. Typical qualifying costs include building materials, contractor and tradesperson fees, necessary permits and equipment rentals incurred to build or modify the living space.
Non-qualifying expenses generally include household appliances, outdoor maintenance, routine upkeep, and security monitoring services. If you perform the work yourself, you may not claim the value of your own labour or the cost of your own tools—only purchased materials and hired services that meet the eligibility rules.
How do I claim the MHRTC?
Keep thorough documentation of all expenses you intend to claim: itemized invoices and receipts, descriptions of the work performed, vendor names and addresses, GST/HST registration numbers where applicable, and dates of purchase and completion. The Canada Revenue Agency requires documentation to support claims.
The MHRTC must be claimed in the tax year in which the renovations are completed. For example, if your project begins in 2023 but finishes in 2024, you would claim the credit on your 2024 tax return. When completing your return, the MHRTC is claimed on the designated line of the T1 General form. Check official guidance when filing to ensure you use the correct line and provide any required supporting information.
Common questions and practical tips
Order of construction: The credit applies regardless of the order in which the primary unit and the secondary unit were constructed or modified. Prior occupancy: There is no requirement that the qualifying relative was living with you before the renovation.
If you are unsure whether your specific project meets MHRTC rules, review official government guidance or consult with a tax professional. Each family’s circumstances differ, and a qualified accountant can help confirm eligibility and advise on which expenses to document and claim.
Record-keeping checklist
- Itemized invoices and receipts that describe materials and services
- Contractor agreements and proof of payment
- Building permits and inspection reports where applicable
- Dates of purchases, start and completion dates for the renovation
- Vendor contact information, including business addresses and tax registration numbers
Good documentation speeds processing and reduces the chance of queries from tax authorities.
Deciding whether to create a secondary unit
Beyond the tax credit, consider practical matters such as privacy, accessibility and long-term care needs. A well-designed secondary unit can provide independence for an older relative while keeping them close for support. Think about accessibility features—such as level access, wider doorways and a bathroom designed for mobility challenges—which may add to renovation costs but significantly improve long-term usability.
If you are planning this kind of renovation, factor the MHRTC into your budget as a potential offset, but base major decisions on your family’s needs and on reliable professional advice for design, construction and tax compliance.
More about real estate and renovations
- Check local zoning and building codes to ensure a secondary unit is permitted and to learn necessary permit requirements
- Obtain multiple contractor quotes to compare costs and timelines
- Discuss long-term arrangements with the qualifying relative to ensure expectations around care, rent or house rules are clear
For personalized guidance, consider speaking with a tax advisor or a licensed contractor who has experience building secondary suites. Proper planning and documentation will help you maximize the benefit of the MHRTC while creating a safe, comfortable home for a family member.